Payroll taxes to be cut as bigger budget surplus is forecast
Payroll taxes will be cut for employers and employees in January after the Government projected a bigger budget surplus for the year, the House of Assembly heard today.
Corporate income tax receipts projected at $800 million have helped to drive revenue that is forecast to total $2.09 billion by the end of the fiscal year, David Burt told MPs.
The Premier and Minister of Finance said that payroll tax receipts of $650 million were also a factor in an increase in projected income, which is expected to be about $61.9 million more than the original budget estimate.
As a result, payroll taxes for employees will be cut by up to $1,560 a year while all employer payroll tax rates will be reduced by half a percentage point.
He noted that the CIT receipts projection was $46.8 million above the original estimate while payroll tax receipts were expected to be $15 million higher than earlier predicted.
“Current account expenditure is projected at $1.26 billion, approximately $14.5 million above the original estimate due to supplementary funding approved earlier this year, while capital expenditure remains on track at $182 million,” Mr Burt said.
“Interest and guarantee management costs are projected at $124.8 million, in line with the original budget.
“The Government is therefore projecting a budget surplus of $520 million for 2026-27, $47.3 million above the original estimate of $472.7 million.”
He added: “These figures demonstrate that we are continuing to manage expenditure responsibly while investing in Bermuda's infrastructure and public services.
“At the same time, we will repay $605 million Bermuda’s debt in January.”
The Premier announced a raft of measures to support residents and provide relief against the island’s cost-of-living challenges.
“Effective January 1, 2027, the Government will reduce payroll taxes for every worker in Bermuda,” he said.
“These changes will reduce tax bills up to $1,560 a year, putting more money back into the pockets of hardworking Bermudians at a time when household budgets remain under pressure.
“No one working in Bermuda will pay more in taxes and will mean the average worker in Bermuda will be paying about $2,500 less a year in payroll taxes, compared to their tax bill under the former OBA [One Bermuda Alliance] government.
“The Government will also reduce the employer payroll tax rate by half a percentage point for all categories, providing relief to businesses of all sizes.”
Land tax exemptions will be provided for sports and social clubs, while customs duty will be reduced on private cars.
Mr Burt announced an additional $19.5 million in spending for 2026-27, including $2.2 million to address “critical social needs”, with funds earmarked for a children’s group home and financial backing for the Government’s Plan to End Homelessness.
“The Ministry of Education will receive an additional $2 million for increased funding to The Berkeley Institute, upgrades to CedarBridge Academy, the purchase of Sandys 360 to support the signature school at Sandys Secondary, additional funding for scholarships and funding to deliver on our platform promise to provide baby boxes to the parents of newborn children,” MPs heard.
“An additional $2.6 million will be allocated to the Ministry of National Security to strengthen public safety and law enforcement capabilities.
“This will mean more tools for our police to tackle crime, improved detection equipment at our border for customs, upgraded protective equipment for our firefighters and modernised facilities at the Royal Bermuda Regiment.
“The Ministry of Justice will be allocated an additional $1.7 million to commence the implementation of recommendations arising from the Commission of Inquiry into Historic Land Losses, progress work on Bermuda’s wrongful convictions’ framework, and boost funding to the Criminal Injuries Compensation Board.”
Mr Burt said: “The stronger financial position we have built over the last nine years has given us the capacity to do more and the people of Bermuda should not have to wait to benefit from that progress.
“The people of this country expect their government to listen to them, understand the challenges they face and take meaningful action to address them.
“That is what they voted for in February 2025 and that is what we are delivering through this midyear review as we fulfil the commitments we made to the people of Bermuda.”
He added: “As I prepare to conclude my tenure as Premier and Minister of Finance, I am proud that Bermuda is in a stronger financial position than when I assumed office. But the true measure of that progress is the difference it makes in the lives of Bermudians, both today and in the years ahead.
“From January 1, workers will keep more of what they earn. Whether they use that money to meet household expenses, spend in our local shops or save for the future, the choice will be theirs.
“Local businesses will also pay less in tax, giving them more room to invest and grow.
“We promised that stronger public finances would bring tangible benefits to the people of Bermuda.
“Today, we are keeping that promise: lowering taxes, investing in the services our people rely on and ensuring that the progress we have made is felt in every home across our island.”
• More to follow
• To see the Premier’s statement in full and the supplementary estimate, see Related Media
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